Section A

In Fitzgerald and Moon's Building Block model for performance measurement in service industries, the 'Standards' block consists of three elements: Ownership, Achievability, and Equity.

What does 'Equity' refer to in this context?

Answer options:

Managers should own shares in the business to align their interests.

Performance standards should be equally challenging across all divisions of the business.

Employees must participate in setting their own targets.

Targets must be realistic and capable of being met.

How to approach this question

Recall the definitions of Ownership, Achievability, and Equity in Fitzgerald and Moon's model.

Full Answer

B.Performance standards should be equally challenging across all divisions of the business.✓ Correct

In Fitzgerald and Moon's Building Block model, 'Equity' means that performance standards should be fair and equally challenging across different parts of the organization. If one division has very easy targets and another has impossible ones, it creates resentment and demotivation.

Common mistakes

Confusing 'Equity' (fairness of targets) with financial equity (shares) or 'Ownership' (participation in target setting).

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Practice the full ACCA PM — Performance Management Practice Exam 6

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